News & Updates

Our blogs keep you up to date with legal issues that may affect you and your family, along with the latest developments from April King.

Living Trust

The Hidden Dangers of ‘Living Trusts’

As we grow older, long-term care costs can become a substantial financial concern for many families.

Firstly, it is important to emphasise that the legitimate solutions offered by April King should not be confused with Living Trusts, which could be classed as deprivation and can cost upwards of £6,000. As well as potentially causing severe consequences for you and your family, the Local Authority often challenge and undo these trusts. For this reason, we do not endorse or have ever offered Living Trusts. Our legitimate solutions are legally sound and affordable.

Deprivation of Assets

Transferring your property to your children or into a ‘Living Trust’ with the aim of evading care fees can be viewed as a deliberate deprivation of assets. This implies you are purposefully reducing your wealth to avoid paying for care services. Local Authorities possess the power to evaluate your finances when determining your eligibility for care funding. If they discover that you have intentionally deprived yourself of assets, they can take action to reverse the transfer and reclaim the value of the property for care fees.

The 7-Year Myth

A common misconception is that there is a 7-year time limit on the Local Authority’s ability to reverse the transfer of property. This is not accurate. The 7-year rule is actually applicable to inheritance tax and has no connection with care fees. In truth, there is no time limit on how far back a Local Authority can investigate and potentially undo a transfer of assets.

Financial and Relationship Troubles

Adding to the risks of transferring your property to your children, doing so also makes your primary asset more vulnerable as you relinquish control over it. If your child subsequently encounters financial or relationship difficulties, your home could be exposed to claims by their creditors or in a divorce settlement. This situation could result in a stranger ultimately owning your home, leaving you and your family in an even more precarious position. In addition, transferring your house to your children may lead to unexpected tax liabilities for them in the future.

Legitimate Solution

April King provides a legitimate solution for couples who want to safeguard their assets without resorting to deliberate deprivation. By crafting two bespoke April Wills®, you can ensure that your property is passed down to your children and grandchildren while still providing for your spouse or partner. This arrangement can assist in shielding the family home from being used to pay care fees in the future.

Upon the first partner’s passing, their share of the property is transferred to a trust. The surviving partner can continue residing in the property for the remainder of their life (or even move house if they wish to). At the same time, the trust ensures that the deceased’s share is protected for their beneficiaries, typically their children and then their grandchildren.

The primary difference between our April Wills® and Living Trusts is that our trusts are testamentary, meaning they are established upon death. By setting up the trust in this manner, you are not depriving yourself of an asset during your lifetime. This distinction ensures that our April Wills® provide a reliable and legally sound approach to safeguarding your property for your loved ones without running the risk of being accused of deliberate deprivation of assets.

Next Steps

For further information on our specialist April Wills® and other bespoke estate planning services, request our complimentary, no-obligation and jargon-free guide.